SOUTH AFRICAN AGRI-PROCESSING RESOURCE EFFICIENCY - Opportunities, challenges and outlook
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SOUTH AFRICAN AGRI-PROCESSING
RESOURCE EFFICIENCY
Opportunities, challenges and outlook
November 2019
IN PARTNERSHIP WITH
About IFC IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2019, we delivered more than US$19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information,visit www.ifc.org © International Finance Corporation [2019]. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 Internet: www.ifc.org The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. Front cover photo: branex / iStock
Table of Contents
Acronyms 5 6. STRATEGIC POSITIONING AND GAP
Acknowledgments 6 ASSESSMENT 46
Executive Summary 8 6.1 Comparative gap assessment,
strategic positioning and approach at the level
1. BACKGROUND AND OBJECTIVES 12 of sub-sectors 46
1.1 Background 12 6.2 Gap analysis and focusing of effort 51
1.2 Objectives 12
7. POLICY FRAMEWORK ON WATER USE IN
2. RATIONALE FOR WATER EFFICIENCY AGRI-PROCESSING IN SOUTH AFRICA 54
IN SOUTH AFRICA 14 7.1 Key policy instruments and approaches 54
2.1 Water scarcity in South Africa 14 7.2 Policy challenges 56
2.2 The agri-processing sector’s economic 7.3 Implementation challenges 57
contribution and water consumption 16 7.4 Water governance at the local level 57
2.3 Gaps in support for water efficiency measures 17
8. OPPORTUNITIES TO IMPROVE THE ENABLING
3. WATER USE PRACTICES IN THE ENVIRONMENT IN THE WATER USE SPACE 60
AGRI-PROCESSING SECTOR 18 8.1 Emerging and potential opportunity areas 60
3.1 Water consumption in agri-processing 18 8.2 Tackling the water challenge at the local level 61
3.2 Water use practices and efficiency:
international comparisons 19 9. SUMMARY AND CONCLUSIONS 64
4. THE BUSINESS CASE FOR WATER References 66
EFFICIENCY IN AGRI-PROCESSING 22 Annex A 68
4.1 Drivers for water efficiency 22 Annex B 70
4.2 Water tariffs and their impact on the water
efficiency business case. Additional revenue
streams and supplementary payback factors 23
5. POTENTIAL AND CHALLENGES FOR WATER
EFFICIENCY IN AGRI-PROCESSING
SUB-SECTORS 26
5.1 Cross-sectoral opportunities for water and
resource efficiency 26
5.2 Cross-sectoral challenges and barriers for
water efficiency 28
5.3 Fruit and vegetable packing, storing
and processing 29
5.4 Dairy processing 32
5.5 Animal slaughtering and processing 33
5.6 Malting and brewing 36
5.7 Wine production 39
5.8 Pulp and paper processing 42
5.9 Sugar cane processing 44
5.10 Summary efficiency potential 45
3
List of Figures
Figure 1 Water consumption in the agri-processing sector 8
Figure 2 Sub-sector potential matrix 9
Figure 3 Factors impacting the business case for water efficiency 10
Figure 4 Barriers for water efficiency 10
Figure 5 Projected water supply and demand in South Africa (Hedden, 2016) 15
Figure 6 2050 water supply vulnerability with medium population grown and climate change exposure considering
local run-off changes (Green Book, 2019) 15
Figure 7 The location of the facilities of the major agri-processing companies within each of following sectors:
fruit and vegetable, animal slaughtering, dairy, brewing, wine, pulp and paper, and sugar 16
Figure 8 Estimated water use in the agri-processing sector by sub-sector. Left-hand chart compares pulp and paper
with food and beverages total water usage. Right-hand chart gives a breakdown of water usage in the food
and beverage sector 18
Figure 9 SA agri-processor sub-sector water usage benchmarks in comparison to international best practice.
Green bar = average and grey bars = upper and lower thresholds 19
Figure 10 Estimated total potential for water and cost savings, per sub-sector. The estimated current total water use
of each sub-sector is indicated by the height of each bar (i.e. target water use plus savings potential) 20
Figure 11 Drivers for water efficiency specifically mentioned during stakeholder interviews 23
Figure 12 Industrial water tariff comparison across key municipalities and municipal districts
(ZAR/cubic m, ex VAT, no water restrictions in place) 24
Figure 13 The business case for smart metering and organic effluent reuse in an agri-processor generating
1 000 cubic m/day wastewater for City of Cape Town’s Level 1 and Level 6 restriction water and sanitation
tariffs (FY 2018/19) 24
Figure 14 Barriers to water efficiency specifically mentioned during stakeholder interviews 29
Figure 15 Estimated water use in the fruit and vegetable sector by processing type 30
Figure 16 Estimated realizable water savings for the fruit and vegetable sub-sector over the next 4-6 years and
required investment (by intervention type, including solar PV) 31
Figure 17 Estimated breakdown of water use in the dairy processing sector by product 32
Figure 18 Nestlé Mossel Bay case study 32
Figure 19 Estimated breakdown of water use in the animal slaughtering sub-sector (WRC 2017a, b) 33
Figure 20 Estimated realizable water savings for the animal slaughtering and processing sub-sector over the next
4-6 years and required investment (by intervention type) 35
Figure 21 Water use for the malting processes 36
Figure 22 Case study: water reuse in steeping 38
Figure 23 Estimated realizable water savings for the brewing and malting sub-sector over the next 4-6 years
and required investment (by intervention type) 39
Figure 24 Case study: Distell 40
Figure 25 Estimated realizable water savings for wine sub-sector over the next 4-6 years
and required investment (by intervention type) 41
Figure 26 Case study: Mondi Merebank 43
Figure 27 Estimated realizable water and cost savings and investment sums for the pulp and paper processing sector
over the next 4-6 years, by intervention 43
Figure 28 Water sources utilized by sugar mills in South Africa (indicates number of mills) 44
Figure 29 Estimated realizable water savings over the next 4-6 years, by intervention type and sub-sector 45
Figure 30 Summary water efficiency potential in agri-processing sector in South Africa 45
Figure 31 Sub-sector strategic positioning 51
Figure 32 Knowledge gaps relating to water efficiency, mentioned during interviews 51
Figure 33 Russia Resource Efficiency Benchmarking Study: the overall cost benchmark and actual performance 52
Figure 34 Water sector institutional framework 58
Figure 35 Green Drop and No Drop scores for 2013 and 2014, respectively 59
Figure 36 Intervention areas at the local level 62
4
List of Tables
Table 1 Summary of water efficiency opportunities in the agri-processing sector 28
Table 2 Efficiency opportunities in fruit and vegetable processing 30
Table 3 Estimated realizable potential for effluent reuse in the dairy industry over the next 4-6 years 33
Table 4 Key statistics for the anaerobic digestion plant at RCL Foods’ abattoir in Worcester 34
Table 5 Water efficiency opportunities in the brewing and malting sector 38
Table 6 Water efficiency opportunities in the wine sector 41
Table 7 The source of water used in the pulp and paper sector and the relative average cost of this water 42
Table 8 Savings potential ranking 47
Table 9 Pre-existing knowledge and planning ranking 47
Table 10 Other benefits (environmental & demonstration effect) ranking 48
Table 11 Capacity to implement ranking 48
Table 12 Level of commitment ranking 49
Table 13 Summary rankings 49
Table 14 Sector concentration/player size ranking 50
Table 15 Project size ranking 50
Table 16 Industrial water and sanitation charges for selected metros (ex VAT, no water restrictions in place) 69
Acronyms
AB Inbev Anheuser-Busch Inbev NWA National Water Act
APRE Agribusiness Resource Efficiency Project in NWP National Water Policy
South Africa NWRS National Water Resources Strategy
CHP Combined Heat and Power O&M Operations and Maintenance
CIP Clean In Place PPP Public-Private Partenrship
CMA Catchment Management Agency PV Photo Voltaic
COD Chemical Oxygen Demand RCL Rainbow Chickens Limited
CSR Corporate Social Responsibility RMAA Red Meat Abattoir Association
DED&T Department of Economic Development SAB South African Breweries
and Tourism SABIA South African Biogas Industry
DWS Department of Water and Sanitation SALGA South African Local Government Association
GDP Gross Domestic Product SECO Swiss State Secretariat for Economic Affairs
GFCF Gross Fixed Capital Formation SSEG Small-Scale Embedded Generation
GWI Global Water Intelligence SWAN Safe Water and Nutrition Program
IFC International Finance Corporation SWPN Strategic Water Partners Network
IDP Integrated Development Plans WCDM Water Conservation and Demand
IPAP Industrial Policy Action Plan Management
kl Kilolitres WCG Western Cape Government
KPI Key Performance Indicator WDM Water Demand Management
MAS Manufacturing, Agribusiness and Services WEF World Economic Forum
MW Megawatt WRC Water Research Commission
NDP National Development Plan WSA Water Services Authority
NEMA National Environmental Management Act WUA Water User Association
NERSA National Energy Regulator of South Africa WWF World Wildlife Fund
NRW Non-Revenue Water
5
Acknowledgments This report was produced as part of a broader Agri-processing resource efficiency Project in South Africa (APRE), aimed to help transition to better water and resource efficiency practices for companies engaged in agricultural processing. The Project is expected to help mitigate water supply risks in the sector, resulting from the water scarcity challenge in South Africa and throughout the region. The Project is funded by the Swiss State Secretariat of Economic Affairs (SECO), and the team would like to thank Franziska Sporri (Head, Economic Cooperation and Development), Gerhard Pienaar (Deputy Head, Economic Cooperation and Development), Nonhlanhla Halimana (Programme Manager, Economic Cooperation and Development) and the entire SECO team for the ongoing support and guidance. The assessment was managed by Alexander Larionov and Rong Chen (IFC). IFC commissioned GreenCape and Pegasys Strategy and Development (Pty) Ltd to support the collection of information and analysis. We appreciate the effort of the key experts, Claire Pengelly (Water Programme Manager, GreenCape) and Derek Weston (Associate Director, Pegasys) and their teams. IFC has partnered with Agricultural Business Chamber of South Africa (Agbiz) to facilitate implementation of the Project and is grateful to John Purchase (CEO) and Theo Boshoff (Manager, Legal Intelligence) for the inputs to the report. The team would like to acknowledge the contribution from stakeholders, including André Robins (Corporate Safety, Health and Environment Manager, Nestlé South Africa), Anil Rambally (Executive: Procurement and Sustainability, Astral Foods), Bernard Niemand (Western Cape Department of Environmental Affairs and Development Planning), Byron Norval (Director, Green Create), Charl du Plessis, (CEO Orange River Cellars), Chris van Dijk (CEO, Milk Producer’s Organisation), Christo Conradie (Manager: Wine Cellars, Agricultural Economy & Tourism, Vinpro), Colin Ohlhoff (Environmental Officer, Fair Cape Dairies), Gerhard Neethling (General Manager, Red Meat Abattoir Association), Heinz Meissner (Programme Manager: R&D, MilkSA), Peter Evans (Head: Consumer Assurance, SA Pig Producers Organization), Dumisani Khoza (iLembe District Municipality), Eddie Vienings (Blue North), Ettienne Thiebaut (Group Sustainability Executive, RCL Foods), Gavin Williams (Saldanha Bay Municipality), Gerard Martin, (Executive Manager, Winetech), Gerhard Fourie (the DTI), Grant Whittaker (National Business Development Manager, COVA Advisory), Gregg Brill (Green Economy Programme, Western Cape Government), Hans Lizemore, (Cellar Technical Manager, Robertson Winery), Henk Ryke (Engineering Manager, Two-a-Day), Henry Shaw (Operations Manager, Winelands Pork), Jacques Pienaar (Plant Manager, Clover), Jill Atwood-Palm (General Manager, SA Fruit and Vegetable Canners Association), Johan Loedolff (Group Manager Operations, Parmalat), Julie Borland (Paper Manufacturers Association of South Africa), Kabols le Riche (Chief Executive Officer, Cavalier Group), Kevin Cilliers (Regional Manager and Water Programme Manager, National Cleaner Production Centre), Koos Bouwer (Packhouse Action Group), Linda Mncube (Siza Water), Maphumulo Zanele (Department of Water and 6
Sanitation), Marthinus Stander (Chairperson, SA Poultry,
CEO, Country Bird Holdings), Martin Minnie (Head of
Production & Maintenance, Elgin Free Range Chickens),
Mary-Jean Gabriel (Department of Agriculture, Forestry
and Fisheries), Mauro Delle Donne (Director, Zandam
Cheese and Piggery), Maxime Eon (Marketing Manager,
Emergent Energy), Mias Pretorius (Elgin Fruit Juices),
Neil Hunt (NH) – (Group Risk and Sustainability Manager,
Mpact), Nico Moloto (Group Executive: Sustainability
& Stakeholders, Pioneer Foods), Philippa Rodseth
(Managing Director, Manufacturing Circle), Pierre Tilney
(Summerpride Foods), Pierre Volschenk (Stellenbosch
University), Rafiq Gafoor (Environmental Manager, Mondi
Group), Renée van Hoeve (Environmental Manager,
Sappi), Richard Kriel, (Masterplan Manager, Heineken SA),
Roger Schierhout (Plant manager, Langeberg and Ashton
Foods), Ronald Brown (Drakenstein Municipality), Rudi
Richards (General Manager, SA Fruit Juice Association),
Ryno Verster, (Technical Manager KWV), Shivani Maharaj
(Zone Environment Manager, AB Inbev), Speedy Moodliar
(City of eThekwini), Thys Els (Technical Manager, Veolia),
Valerie Naidoo (Water Research Commission), Wimpie
van der Merwe (Technical Director, Proxa).
The team is grateful to World Bank Group colleagues
for support of the assessment, as well as feedback on the
report. We would like to thank Aref Adamali, Nondumiso
Bulunga, Philippa McLaren, Raymond Greig, Robert Peck
and Rumbidzai Sithole. Also, many thanks to graphic
designer Pierre Jansen van Rensburg, as well as Steven
Palmer and the full team at Titanium Room for the
excellent production of the report.
Photo: sergeyryzhov / iStock
7Executive Summary
South Africa’s agri-processing sector is a key driver of economic growth, as it contributes
to value addition, job creation and exports. Increasing water scarcity, combined with
rising costs of energy and fuel, is threatening the competitiveness and sustainability of
the sector. IFC’s Manufacturing, Agribusiness and Services (MAS) Advisory team, in
partnership with the Swiss State Secretariat for Economic Affairs (SECO), launched
a four-year program – the Agribusiness Resource Efficiency Project in South Africa
(APRE) – to address market challenges and help the industry transition to better water
and resource efficiency practices. The program aims to improve water use efficiency,
reduce overall water consumption, and mitigate water supply risks in the sector.
In January through May 2019, the IFC project team, with support from GreenCape, one of
the leading agencies in the resource efficiency space in South Africa, and with inputs from
the Agricultural Business Chamber (Agbiz), one of the largest industry associations, has
conducted a study of opportunities for reduction of water use in agri-processing, analyzed
persisting barriers for better efficiency and highlighted possible areas for improvement at
the level of the firms, within the sector as a whole as well as in the policy and regulatory
framework.
To perform the assessment, the team has conducted an extensive review of available research
on the topic and interviewed more than 50 private firms, government agencies and sector
associations.
The key findings of the assessment are presented below.
1. The sector’s water consumption of approximately 130 million m3/year is divided between
pulp and paper and food and beverage sub-sectors. Food and beverage sub-sectors, in turn,
are represented by 9 key sub-sectors, six of which together with pulp and paper sub-sector
account for approximately 90% of total water consumption by the agri-processing sector:
Figure 1. Water consumption in the agri-processing sector.
Fishery 1% Brewing and
80 000 000 Edible oil 4% malting
70 000 000 Sugar 10% total 17%
60 000 000
Water use (kl/yr)
50 000 000 Fruit &
40 000 000 vegetable
total 8% Wine
30 000 000 10%
20 000 000
10 000 000
Dairy
0 12%
Animal
Pulp & Food & slaughtering
paper beverage total 26%
8The cold drink sub-sector is dominated by companies c. Water reuse, recycling and effluent treatment
that are diversified into other sub-sectors and Coca- projects, which could include biogas-to-energy
Cola, a single major international producer, and is components.
less associated with the agri-processing operations.
Realization of this potential would result in savings of
Therefore, the cold drink sector was excluded from the
over US$20 million annually (excluding corresponding
detailed analysis of the food and beverage sector.
energy savings and indirect savings from avoided
2. As demonstrated by high-level international loss) and require investment of over US$400 million.
comparisons, while the South African agri-processing Approximately 80% of the savings potential can be
industry is performing well compared to international achieved with US$200 million of investment.
companies, there are still opportunities for improved
efficiency. However, the economic potential is limited 4. Poultry, red meat, dairy, fruit and vegetable subsectors
by the relatively low cost of water and wastewater represent the most unrealized yet feasible potential for
discharge fees, which weakens the business case. water efficiency, followed by malting and brewing as
well as wineries. The water-related projects in the pulp
3. The total potential for primary water savings across
and paper sector, as well in the sugar sector, tend to be
the key agri-processing sub-sectors can be estimated
much larger on average; however, a lot of the potential
at just under 30 million m3/year, equivalent to 20%
has already been realized.
of the total sector consumption (this varies between
10% and 65% across sub-sectors and in best-practice 5. The drivers for water efficiency are not solely
technologies already implemented by some players). associated with the direct cost of water through tariffs
The potential would be realized through these key and fees. Business continuity, water scarcity and
types of intervention: quality risks are the key drivers in many cases. They
a. Low-cost savings measures, including retrofits of could be further quantified through loss of production
water supply and distribution infrastructure at the output and revenue as well as the increased cost of
company facilities; alternatives. The business case can be further enhanced
b. Process improvements and equipment upgrades by additional revenue streams, from effluent to biogas
that result in a reduction of water use per unit of projects, sales of energy and other effluent treatment
output; and by-products.
Figure 2. Sub-sector potential matrix.
High
Red meat
Poultry
Impact (size of the gap)
Dairy
Brewing &
malting
Pulp & paper Fruit & vegetables
Wineries
Sugar
Low Likelihood of achieving impact High
9Figure 3. Factors impacting the business case for water efficiency.
100
90
80
% of companies interviewed
70
60
50
40
30
20
10
0
Bus continuity CSR/ Wastewater High water/ Restrictions Expansion Other
(water scarcity Multinational regulations wastewater projects
and quality) pressure charges
Fruit & vegetable Dairy Animal Brewing Wine Pulp & paper Overall %
6. Among the challenges and barriers, the companies consistently mention the weak business case, as well as lack of
knowledge of best practices, indicating a need for support in developing projects. A number of issues raised are associated
with the enabling environment for water efficiency and regulatory matters.
Figure 4. Barriers for water efficiency.
100
80
% of companies interviewed
60
40
20
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107. In the policy space, advancements in the following key
areas will create an enabling environment for water
efficiency:
• Integrated planning of water use;
• Water use authorization and groundwater use
licensing;
• Water reuse and recycling regulations (including
sector-specific); and
• Water use tariffs and fees, water discharge and
treatment payment review.
While the public-private dialogues still remain an
efficient instrument to reaching these goals, and
municipal authorities are important stakeholders and
potential partners in those engagements, there are other
key groups of regional/local stakeholder that might be
the lead counterparts:
• Water users’ associations;
• Emerging catchment management agencies; and
• Sector associations engaged in advocacy on standards
and requirements for a given sub-sector (as relevant
for corresponding agri-clusters).
Photo: Danilo Pinzon / World Bank
111. Background and objectives
1.1 Background
Water scarcity, greater water demand and changing water supplies due to climate
change are severely affecting large parts of Southern Africa, including South Africa.
These issues pose a significant risk to the region, underlined by the identification
of water supply as one of the highest ranking long-term global risks by the World
Economic Forum.1 South Africa faces several challenges regarding water supply –
rainfall levels are already lower than other parts of the world, and in recent years,
water availability has been further impacted by El Niño, a weather phenomenon that
affects ocean water temperatures and associated rainfall patterns, resulting in severe
drought. Coupled with increasing demand for water, these limitations mean that the
gap between demand and supply of water is set to widen significantly.
The Government of South Africa recognizes that water security is essential for meeting
the policy objectives of inclusive economic growth and reduced poverty, as set out in the
National Development Plan. The National Water Resource Strategy 2, the instrument used
to operationalize the National Water Act (Act 36 of 1998) (NWA), aims to ensure that water
resources are managed in a way that contributes to South Africa’s economic and social objectives,
identifying conservation and demand management as a critical element of the strategy.2 The
Water Services Act (Act 108 of 1997) governs supply of water and sanitation services at a
municipal level, and sets out norms and standards for tariffs, while the Municipal Systems Act
(Act 32 of 2000) provides for establishment of by-laws by local government covering tariffs
for water and effluent. Other developments in the environmental legislation, such as the ‘user
pays’ and ‘polluter pays’ principle implementation governed by the National Environmental
Management Act (NEMA), will also have the impact on effluent treatment policies.
The new legislation will be supported by a Water Security Framework, National Water and
Sanitation Resources Strategy, and a National Water and Sanitation Master Plan; these aim
to support reduced future water demand, amongst other key objectives. Despite the focus on
improving the enabling environment, responses to water security challenges have proven to
be inadequate, as evidenced by various ‘Day Zeros’ in the Western and Eastern Cape Province.
1.2 Objectives
The agri-processing sector plays an important role in South Africa’s economy, making
significant contributions to Gross Domestic Product (GDP), exports, employment and food
security. However, increasing water scarcity, combined with rising costs of energy and fuel,
1
World Wildlife Fund (2017). Water scarcity overview.
2
Applicable legislation, in addition to the National Water Act and Water Services Act, includes the National Environmental
Management Act, National Environmental Management: Waste Act, National Environmental Management: Air Quality
Act, and Environmental Conservation Act, which cover waste management, amongst other issues. Other legislation
covering industrial processes is also applicable to water and waste management, for example the Occupational Health
and Safety Act, as well as sub-sector specific legislation such as the Meat Safety Act.
12is threatening the competitiveness and sustainability of
the sector. The key impediments preventing companies
from fully addressing water scarcity are a lack of a clear
business case as to the benefits of investing in water
efficiency measures; inadequate access to information and
advice on best practices and benchmarks; and a lack of
technical capacity and experience in implementing water
use and efficiency measures and technologies. Furthermore,
the policy and regulatory environment does not adequately
encourage water efficiency measures.
The Agri-Processing Resource Efficiency (APRE) program,
implemented by International Finance Corporation
(IFC) with support from the SECO, aims to promote the
implementation of cost-effective and innovative water and
energy efficiency technologies and practices. As in many
other sectors, the use of water by the agri-processing sector
is tied to energy use.
As part of the project, IFC, with support from GreenCape,
one of the leading agencies in the resource efficiency space
in South Africa, and with inputs from Agricultural Business
Chamber (Agbiz), one of the largest industry associations,
has conducted a study of opportunities for reduction of
water use in agri-processing, analyzed persisting barriers
for better efficiency and highlighted possible areas for
improvement at the level of the firms, within the sector as
a whole as well as in the policy and regulatory framework.
Photo: Scott Goodwill / Unsplash
132. Rationale for Water Efficiency
in South Africa
2.1 Water scarcity in South Africa
South Africa is a water-scarce country and is characterized by a skewed distribution
in rainfall and evaporation rates that far exceed precipitation. Due to the El Niño and
climate change, parts of South Africa, including the Eastern Cape, Free State, North
West, Limpopo and Western Cape Province have suffered from severe droughts.
Consumption of water in South Africa is estimated at over 16 billion m3/year, with demand
expected to increase significantly. Municipal use (including domestic use) makes up 27 percent
of consumption. Non-domestic consumption is estimated at 10 billion m³/year, of which
about 9 billion m³/year is drawn from non-mains sources and 1 billion m³/year is potable
water. Primary sectors (agriculture, mining and afforestation) use about 93 percent of non-
domestic consumption, while secondary industrial sectors (including energy production) use
about 7 percent, at 640 million m³/year. The manufacturing sector (including agri-processing)
uses about 360 million m³/year.3
Forecasts indicate that the gap between water supply and demand is expected to increase over
the next 20 years. A significant contributor to this growth in demand is the industrial sector,
of which agri-processing is an important component.
3
Sources: GreenCape. 2018. Water 2018 Market Intelligence Report; 2030 Water Resources Group. 2018. NRW and
Wastewater Financing in South Africa: Market Size, Barriers and Opportunities for SWPN South Africa.
14Figure 5. Projected water supply and demand in South Africa (Hedden, 2016).
Total water withdrawals for all sectors forecasted to 2035 and
total water supply, including yield increases from all large-scale
water reconciliation strategies Water withdrawal for the three sectors
20 12
19 10
18 8
Cubic kilometres
Cubic kilometres
17 6
16 4
15 2
14 0
20 4
20 15
20 6
20 17
20 8
20 9
20 0
20 21
20 2
20 3
24
20 5
20 6
20 7
20 8
20 9
20 0
20 31
20 2
20 3
34
35
90
95
00
05
10
14
2
3
2
2
3
2
2
2
2
1
1
1
1
2
3
20
20
20
20
20
19
19
20
20
Total withdrawals Total supply Agriculture Industrial Municipal
Source: Hedden 2016, Parched prospects II: A Revised Long-term Water Industrial water demand is calculated as the sum of water demand for
Supply and Demand Forecast for South Africa. thermo-electric power generation (cooling) and water demand for the
manufacturing sector.
By 2050, many parts of South Africa (including areas with concentrations of industrial activity) are expected to be vulnerable
to water supply risks (Figure 6).
Figure 6. 2050 water supply vulnerability with medium population grown and climate change exposure considering local run-off
changes (Green Book, 2019).
152.2 The agri-processing sector’s economic is expanding, with product sales increasing from around
contribution and water consumption ZAR110 billion in Q2 2010 to ZAR130 billion in Q2 2018
in constant 2018 ZAR.7 The gross fixed capital formation
(GFCF) for the food, beverages and tobacco sector was
For the purpose of the study, agri-processing is defined just under ZAR4 billion in the 1970s and is projected to
as the sector of the economy that comprises primary and reach ~ZAR14 billion in 2021.8 Investments in the food
secondary processing of primary agricultural produce sector are dominated by a handful of large companies.
to transform this into value-added goods. This includes In 2015, 74% of the total fixed investments in this sector were
such sub-sectors as diversified food processing and attributed to Tiger Brands, Pioneer Foods Group, AVI Ltd,
timber processing (pulp and paper); however, excludes Oceana Group, RCL Foods, Tongaat Hulett, Rhodes Food
food and other agricultural product distribution, Group, Astral Foods and Clover Industries.9
logistics and retail.
Figure 7 shows the location of the manufacturing facilities
of the major companies within some of the key agri-
The agri-processing sector plays an important role in South processing sub-sectors, including animal slaughtering, dairy,
Africa’s economy, contributing ~4.3% of the country’s fruit and vegetable processing, pulp and paper, brewing
gross domestic product per the data from Department of and malting and wineries. Ekurhuleni, eThekwini, Cape
Agriculture, Fisheries and Forestry,4, 5 employing more than Town, Theewaterskloof and Drakenstein are important
200 000 people,6 contributing about 10% of exports, and local municipalities and municipal districts in the agri-
supporting food security in the country and regionally. processing sector, as well as Stellenbosch, Witzenberg, Kou-
Furthermore, agri-processing companies located in rural
Kamma, Nelson Mandela Bay (Port Elizabeth), Breede
areas, where primary production occurs, provide crucial
Valley, Nkomazi and Johannesburg. The Western Cape,
jobs for rural communities.
in particular, hosts a number of agri-processing facilities.
As such, agri-processing is a key sector earmarked for The food, beverages and tobacco sector is the province’s
growth and development in various policies and mandates, largest manufacturing sector, (28.1% of manufacturing in
including the Industrial Policy Action Plan (IPAP). The 2017,) and is a priority economic sector for the Western
food and beverage sector (a sub-sector of agri-processing) Cape Government.10
Figure 7. The location of the facilities of the major agri-processing companies within each of following sectors: fruit and vegetable,
animal slaughtering, dairy, brewing, wine, pulp and paper, and sugar. Source: GreenCape 2019.
The Location of the Facilities of the Major Agro-processing Companies in each Priority Sector:
No. of Agri-processing
Musina
la
me
Facilities per Municipality
Thula
Blouberg New
Makhado
Greater Giyani
0 Lephalale Mogalakwena
Molemole Greater Letaba
n Ba-Phalaborwa
Tza nee
1 Greater
Polokwane
mp i
Nku Maruleng
2
Lepele-
Thabazimbi Modimolle/Mookgophong
Bushbuckridge
Greater Tubatse/Fetakgomo
Makhuduthamaga
3
Be
la-B
ela
Moiloa
Ephraim Mogale
Thaba Chweu
Moses Kotane M Dr JS Moroka
Ramotshere
o re
4
Elias Motsoaledi
te
le
Thembisile
Local Municipality of Madibeng Mbombela
Nkomazi
Rustenburg
Emakhazeni
5
Ste
Kg
City of Ts hwane
et
ve
le ng
Mafikeng
Tshw
riv
Mogale City
ie
ete
r
Ekurhuleni
Chief Albert Luthuli
6
Kagisano/Molopo Ratlou
Ditsobotla
City of J ohannesburg Victor Khanye
Merafong City
Ven Rand West City
te di
rs Le se Govan Mbek i Ms ukaligwa
do
9 Tswaing rp
Mid
/T ni
lo Em fule g
va
kw sen
na e Dip ale
al
Joe Morolong Matlosa Me
Naledi City of ts im Lekwa
ah
14
olo Mk hondo
yalin gana
M
Dawid Kruiper e
aq
Sem
Isaka
ua
y Ka
ss
Mamusa Dr Pixle
iH
Jozini
Mafube
Umh labu
Ngwathe
ill
s
15
eDumbe
Greater Taung e uPhongolo
a an
ar
Newcastle
ag Ga-Segony ana em Nala Emadlangeni
m a-Te Phumelela
Ga kw Moqhaka
Phokwane Le
Abaqulusi
a
Nketoana
Interviewed Company Sites
m
isa
go
Hlab
Non
er
Tsants abane Tswelopele Matjhabeng aus Five
Big
Ma
Dannh i
Kgatelopel
m en
ga
Dik gatlong du
re ng
Maluti a Phofung En Nqutu Ulundi atuba
Mtub
Dihlabeng
Alfred Duma
e
Tokologo
nen i Mfolo
Ms inga
zi
Masilonyana Nkandla Mthonja uM
Setsoto hl
athu
Ric htersveld Okhahlamba ze
e
Sol Plaatjie alel uMlalazi
Kai !Garib Siyancuma alib
ng Umv oti
i La
os Maphumulo Mandeni
Mantsopa Ink na
!Kheis ofa
Mp
Letsemeng Mangaung KwaDukuza
Nama Khoi uMngen i uMshwathi we
Im pe ed
Khâi-Ma
ndle Ndw
Siyathemba The Msunduzi
Thembelihle
ni
Dr Nkos azana Dlamini Zuma Ric hm
k wi
Mk hambathini
on
he
Kopanong d
eT
Gre
Um
Ubuhlebezwe Um
ate
Mohokare zim
Renos terberg kh do
r Ko
ni
Matatiele ul
Kamiesberg u
kst ad
Kareeberg Umz umbe
uMuziwabantu
Emthanjeni
Umz imv ubu Ray Nkonyeni
Ums obomv u Senqu
Elundini Mbizana
Hantam Walter Sisulu Ntabankulu
o Ngq uz
Matz ik ama a Hill
lo ntl
Mh
Ubuntu e
zw
khisi
Nyande
i Port St Johns
hlen Sa
ala
Em Engcobo
Karoo Hoogland
ni
King Sabata Dalindyebo
Enoch Mgijima
Inx uba Yethemba Intsika Yethu
Mbhashe
Cederberg Beaufort West
Mnquma
Amahlathi
Raymond Mhlaba Great Kei
Bergrivier Blue Crane Route
Sa
lda Buffalo City
nh Witzenberg Dr Beyers Naude
a Ba
y Prince Albert
Laingsburg a
s hw
Makana qu
Swartland Ng
Sundays River Valley
Drakenstein
be
Kannaland Oudtshoorn lam
y Nd
Valle George
de
City of Cape Town Br ee Langeberg Nelson Mandela Bay
am Kou-Kamma Kouga
Stellenbosch Knysna Bitou
le nd Bay
el Mossel
$
Sw Hessequa
Theewaterskloof
Overstrand Cape Agulhas
Kilometers
0 45 90 180 270 360
4
As of June 2019, the name of the Department changed to Agriculture, Rural 7
StatsSA 2018.
Development and Land Reform. Legacy acronym used throughout the 8
Quantec 2018.
document. 9
Nhundu 2017.
5
DAFF 2017. 10
Provincial Treasury, 2018.
6
DTI 2017.
16Agri-processing is heavily dependent on water for a number consumers, the redirection of surplus water to such groups
of processes, and as an input to end-products. Processes is often hindered by a lack of new bulk infrastructure
that use water include equipment and general cleaning and investment and the ability of under-served users to pay for
sterilization; washing and conveyance of produce; steam their water.
generation; cooling; cooking, pasteurizing, tanning, dyeing,
A similar issue relates to effluent treatment, whereby
etc.11 As many of the manufacturing sites are located in
private initiatives can reduce the economic viability of
areas that face water scarcity challenges, the sector is highly
public effluent treatment plants, particularly in the case
vulnerable to water-related risks. The potential impacts of
of large agri-processors that are often the dominant users
these risks include financial and operational losses, cut-
of local plants. This has implications for the structuring
backs, retrenchments and closures.
for Public-Private Partnerships (PPPs) that are increasingly
In addition, industry is often dependent on Water Services pursued by local authorities in South Africa for their
Authorities (WSAs, typically municipalities or state-owned effluent treatment solutions.
entities) to provide water and sanitation. However, many
In some cases, food safety and quality assurance and
WSAs lack the capacity to deliver these services reliably. Each
related regulations pose barriers to adoption of water
year WSAs are assessed for their institutional effectiveness,12
efficiency measures which are considered good practice in
and in 2016/17 only 5% were rated as having a low
other countries or are inconsistently applied leading to lack
vulnerability, while 70% were rated as either highly (33%)
of clarity amongst industry players.
or extremely (37%) vulnerable. These capacity constraints
further increase the risks of water shortages to businesses There is also limited direct support for water efficiency –
and can lead to significant impacts. As an example, a major while various initiatives, such as water footprint assessments
poultry producer, claimed over R85 million profit loss and water and energy efficiency audits and surveys,15
at one of their facilities due local municipality failing to are underway in South Africa, direct water efficiency
provide reliable water services, because of the deteriorating engagements with industrial companies are limited and
infrastructure. Their employees can only work half their tend to deal with more basic efficiency measures. The lack
normal hours due to the restricted water supply.13 of engagement is due to an unclear understanding of the
business case for water efficiency measures. A rigorous
South African industry is therefore highly vulnerable to
and robust analysis of the cost drivers, related operational
water supply risks, and in 2019 the World Economic Forum
procedures and realized efficiencies, including advanced
ranked ‘water crises’ as the second highest risk for doing
monitoring and management systems, is often needed.
business in the country,14 closely behind unemployment.
In addition, the country faces challenges in implementation
of its policy intentions. This becomes particularly apparent
2.3 Gaps in support for water efficiency
at the local level, where municipalities face institutional
measures
and capacity limitations, such that 54% of municipalities
While South Africa has a relatively dynamic water policy that submitted Green Drop information achieved critical
framework, the policy and regulatory environment falls and poor scores, with this rising to 70% for the No
short of encouraging water efficiency measures, and in Drop program. These constraints have translated into
some cases poses barriers to improved water use. ageing infrastructure that is not effectively operated and
maintained, such that as much as 41% of municipal water
Overall, water tariffs remain relatively low, thus the
does not generate revenue and 35% of water is lost through
business case for investing in water efficiency is driven
leakages.16
primarily by mitigating the risks associated with decreasing
water supplies. The effects of low water tariffs can adversely Due to the complexity that these issues create in shaping
impact companies, rather than by potential cost savings. effective policy, solutions that focus on institutional and
Furthermore, there is a complex system of incentives, some procedural challenges become increasingly relevant. They
of which run contrary to the encouragement of effective provide opportunities to address the implementation
water management. For example, industrial and consumer challenge that local authorities face, and, when coupled
water savings measure can reduce municipal revenues, with with increased participation in and partnership with the
some municipalities reporting a steady decline in revenues private sector in water management, they can open new
as a result of conservation measures introduced in response opportunities to close the gap between stakeholder’s
to recent droughts. While such savings would otherwise expectations of local authorities and the quality of service
free up water to supply new developments or under-served that the authorities are able to provide.
11
Cohen, B., Mason-Jones, K. and Rambaran, N. Doing Business in South Africa, Water in Agro Processing.
12
Department of Water Affairs and Forestry 2003.
13
Business Day 2019.
14
WEF 2019.
15
Carbon Dioxide Information Analysis Center, Top 20 Emitting Countries by Total Fossil-Fuel CO2 Emissions for 2008.
16
Department of Water and Sanitation 2018.
173. Water use practices in the
agri-processing sector
3.1 Water consumption in agri-processing
The agri-processing sector is estimated to use ~130 million m3/year, of which ~55%
is for food and beverages, and ~45% for pulp and paper (Figure 8).17 Figure 8 also
shows the estimated breakdown of water used in the food and beverage sector, with
animal slaughtering account for roughly one quarter.
Figure 8. Estimated water use in the agri-processing sector by sub-sector. Left-hand chart
compares pulp and paper with food and beverages total water usage. Right-hand chart gives a
breakdown of water usage in the food and beverage sector.18
Fishery 1% Brewing and
80 000 000 Edible oil 4% malting
70 000 000 Sugar 10% total 17%
60 000 000
Water use (kl/yr)
50 000 000 Fruit &
40 000 000 vegetable
total 8% Wine
30 000 000 10%
20 000 000
10 000 000
Dairy
0 12%
Animal
Pulp & Food & slaughtering
paper beverage total 26%
This study focuses on seven key sub-sectors, which account for ~90% of water used in
the agri-processing sector, excluding cold beverages, that are not linked to agri-processing,
but covers diversified beverage operations under the dairy and fruit and vegetable (juice
processing) sectors:
• Fruit and vegetable processing;
• Dairy processing;
• Animal slaughtering and processing (includes red meat and poultry, which are assessed
separately, as relevant);
• Brewing and malting;
• Wine production;
• Pulp and paper processing; and
• Sugar production.
17
Classification of which sectors belong to agri-processing vary, but for the purposes of this assessment, it includes food
and beverages and pulp and paper sectors.
18
Water usage data was generally estimated from average water benchmarks linked to production within each sector,
multiplied by the production numbers (e.g. sourced from WRC NATSURVs, if available). WRC 2010 was also used to
estimate the usage within the pulp and paper, soft drink, edible oils and fisheries sub-sectors.
18These sub-sectors are also associated with high wastewater efficiency are revealed (see Figure 9). For instance, average
volumes that represent a potential resource for improved water usage in dairy processing is on par with international
water and energy efficiency. averages, but the highly efficient polish dairy sector
demonstrates the potential for even higher efficiencies.
3.2 Water use practices and efficiency: However, the local conditions may require higher water
international comparisons usage in comparison to cooler countries, and as seen below
South African agri-processors compare relatively well to there is a high degree of variability within the local sector
international companies in terms of water efficiency, and benchmarks. It is for this reason that the most efficient
it is only when South African companies are compared to users in South Africa were the basis for the estimations of
international best practice, that notable opportunities for the potential for efficiency potential in the rest of the sector.
Figure 9. SA agri-processor sub-sector water usage benchmarks in comparison to international best practice. Green bar = average
and grey bars = upper and lower thresholds.
Fruit & veg (fruit juice processing) Dairy processing (bulk production milk)
[litres water/litre juice] [litres water/litre juice]
5
4.5 1.8
4 1.6
3.5 1.4
3 1.2
2.5 1
2 0.8
1.5 0.6
1 0.4
0.5 0.2
0 0
SA International best SA International best
practice practice
Red meat slaughtering & processing Poultry slaughtering & processing
[kl/SU] [litres/bird]
15
3 14
2.5 13
2 12
1.5 11
1 10
0.5 9
0 8
SA International best SA International best
practice practice
Brewing & malting Wine Production
[litres water/litres beer] [litres water/kg grapes processed]
5
4.5 4
4 3.5
3.5 3
3 2.5
2.5 2
2 1.5
SA International best SA International best
practice practice
Pulp & paper production (paper) Sugar production
[kl/ton] [kl/ton cane]
21 1.2
19 1
17 0.8
15 0.6
13 0.4
11 0.2
9 0
SA International best SA International best
practice practice
19While the South African agri-processing industry is potential in the sugar, animal slaughtering, and brewing
performing well compared to international companies, and malting industries.
there are still opportunities for improved efficiency. Figure
However, as some industries typically source their water
10 shows the estimated water savings potential per sub- from cheap raw water sources (e.g. sugar and pulp and
sector (shown in red), with the target water use shown in paper), the water cost savings (indicated by the black dots)
green. The target water use is based on the local minimum are relatively low, compared to industries that purchase
water use benchmarks within the relevant sector, and potable municipal water. As a result, the water cost savings
therefore assumes that each agri-processor could become in the animal slaughtering sector (which typically sources its
as efficient as the most efficient agri-processor in their water from municipal supplies) are estimated to be higher
sub-sector in South Africa. These calculations show that than those in the pulp and paper industry (~ZAR200m/
there is significant potential for water savings in the pulp yr compared to ~ZAR150m/yr), despite the lower water
and paper industry (~20 million cubic m/yr), with notable savings potential (shown in grey).
Figure 10. Estimated total potential for water and cost savings, per sub-sector. The estimated current total water use of each sub-
sector is indicated by the height of each bar (i.e. target water use plus savings potential).19
70 000 000 ZAR250 000 000
60 000 000
Water & sanitation cost savings
ZAR200 000 000
50 000 000
kl per year
ZAR150 000 000
40 000 000
30 000 000
ZAR100 000 000
20 000 000
ZAR50 000 000
10 000 000
0 ZAR0
g
r
e
g
g
ng
ry
Po l
Re l t r y
t
e
Br al
g
ng
r
ta
pe
ga
ea
in
bl
in
in
in
in
t
ai
i
zi
to
to
ta
W
ss
ew
Pu alt
or
ic
m
Su
pa
u
D
ee
Ju
ce
st
g
g
e
M
d
&
fr
rin
tin
bl
ro
&
g/
lp
ta
te
al
p
ng
n
ge
m
e
gh
Ve nni
ki
bl
ve
d
au
ac
ta
a
an
tc
t&
tp
ge
sl
g
al
ui
ui
ui
in
im
Fr
Fr
fr
ew
An
e
m
Br
Po
Target water use (kl/yr) Savings potential (kl/yr) Cost savings (ZAR/yr)
However, such an assessment based on high-level In the next chapter, the business case for water (and
international comparisons, doesn’t account for the specifics resource) efficiency is discussed, followed by the more
of a given sub-sector, including the types of products (grade, detailed analysis of opportunities at the sub-sector level
species, cultivar), local conditions (available resources, based on available data on similar projects as well as projects
land, logistics, climate) and labour. Further, the economic implemented by interviewed companies. This will allow the
potential needs will depend on the business case, defined to study to arrive at more accurate estimates on water savings
a significant extent by tariffs that are set at the local level opportunities, size of the gap in terms of performance and
and also vary between sub-sectors. knowledge and then prioritize interventions in the context
of the APRE project.
19
Cost savings were estimated assuming that sugar, pulp and paper and packhouses source their water from raw water sources at ZAR2/kl, and the remainder
source water from municipalities (assumed to cost ZAR32/kl for water and sanitation). This cost is based on the average Step 1 tariff of the municipalities shown in
Figure 12, and assuming the sanitation charge is 50% of the water charge and applies to 95% of the water used. Water savings potential estimates were based on
minimum water use benchmarks in South Africa.
20Photo: A’Melody Lee / World Bank
214. The business case for water
efficiency in agri-processing
4.1 Drivers for water efficiency
The interviews with key stakeholders in the agri-processing sector revealed that the
major drivers for the adoption of water efficiency in the sector are as follows (see
Figure 11 for their relative importance):
• Business continuity risk, linked to water shortages or poor water quality, is the dominant
driver for investment water efficiency in the sector. Where these risks are serious,
companies are willing to invest in water efficiency and reuse projects that provide water
security, even when traditional paybacks are unfavourable. For example, at RCL Foods’
Rustenburg facility, their planned water efficiency interventions will increase their back-
up (reservoir) water supply from 8 to 16 hours, thereby limiting business continuity risks
linked to temporary water shortages.
• Corporate social responsibility (CSR) is also a key driver, particularly for multi-national
organizations. Sectors dominated by multi-national companies, such as brewing and
pulp and paper, are strongly driven to invest in water efficiency through CSR.
• Wastewater discharge regulations and charges are often a driver for effluent reuse
projects. Companies that discharge wastewater to the environment (or for irrigation)
are required to meet water quality standards and obtain the required licences or
authorizations. Similarly, wastewater discharged to the municipal sewer systems may
incur surcharges or penalties if the quality does not meet the desired standards. For
companies that are under pressure (financially or legally) to invest in systems to pre-treat
their wastewater before discharge, the option of further treating to potable standards
for reuse becomes more attractive. For example, a dairy invested ZAR12 million in a
membrane bioreactor plant in order to meet wastewater discharge limits and plans to
invest in a reverse osmosis plant to further treat the effluent to potable standards for
reuse. However, in general, enforcement is poor, and many companies prefer to pay the
fines or ignore the regulations even if risking being shut down.
• Investment in utilities is often a lower priority for agri-processors than investment
in expansion projects. Water efficiency projects that enable the business to expand,
are likely to be more attractive.
• Other drivers include water restrictions, the benefits of improved competitiveness through
better compliance and water and energy cost savings (especially low-cost interventions).
The observed situation corresponds with that seen in many emerging markets, where the
cost of water is perceived by companies directly through the tariffs and cost of energy
associated with water supply, distribution and discharge. At the same time, direct costs often
do not factor in the water scarcity and supply issues, and the companies find other ways to
incorporate these criteria in their decision-making process.
22Figure 11. Drivers for water efficiency specifically mentioned during stakeholder interviews.
100
90
80
% of companies interviewed
70
60
50
40
30
20
10
0
Bus continuity CSR/ Wastewater High water/ Restrictions Expansion Other
(water scarcity Multinational regs wastewater projects
and quality) pressure charges
Fruit & vegetable Dairy Animal Brewing Wine Pulp & paper Overall %
Motivation associated with regulations, as voiced by dependent on the location of the plant and the source of
respondents’ is an important factor and calls for analysis the water. As a result, the payback periods for many of
of the policy around water use in general, and specifically the capital-intensive water projects (e.g. effluent reuse or
agribusiness, which is further explored in Chapter 8. biogas) are typically not less than 7 to 8 years. Paybacks
can be even longer, especially if water is drawn directly
The next section discusses the tariffs, charges and their
from cheaper surface or groundwater (raw water) sources.
role in the business case for water efficiency in South
Agri-processors, as shown in the following Chapters, are
Africa, which is important to arrive at valid assumptions
typically interested in investments with paybacks of less
for further potential estimation – and formulate possible than 3 years and are therefore unlikely to invest in these
interventions for enhancing the business case. types of water projects, unless there are other drivers
(e.g. business continuity risks, corporate social responsibility,
4.2 Water tariffs and their impact on the regulatory compliance, expansion). To illustrate the impact
water efficiency business case. Additional of tariffs on the business case, Figure 13 compares the
paybacks for effluent reuse and smart metering under
revenue streams and supplementary
the City of Cape Town’s Level 1 and Level 6 restrictive
payback factors
tariffs21 for a food and beverage company generating 1 000
Water tariffs are relatively low as municipalities are cubic m/day wastewater.22 Regardless of the tariff, smart
often reluctant to raise tariffs to cost-reflective levels. metering (a low-cost intervention) makes business sense,
Because tariffs vary significantly across municipalities, whereas the feasibility of effluent reuse is highly dependent
see Figure 12 and Table 16,20 the business case is highly on the tariffs.
20
The data compares volumetric water tariffs and excludes any fixed costs, surcharges.
21
Tariffs are often linked to water restriction levels, with higher tariffs corresponding with higher water restriction levels.
22
Municipalities set different tariffs for different water restriction levels, and tariffs typically increase as restriction levels increase.
23Figure 12. Industrial water tariff comparison across key municipalities and municipal districts (ZAR/cubic m, ex VAT, no water restrictions
in place).23
45
40
35
Water tariff ( ZAR/kl ex VAT)
30
25
20
15
10
5
0
rg
i
n
e
ni
ch
in
of
y
y
rg
a
6)
in
Ba
le
an
m
w
le
te
lo
/1
bu
be
os
w
l
To
m
Va
hu
w
15
sk
ns
la
ek
en
nb
es
a
20
h
de
er
pe
ur
ke
-K
de
h
nn
Ts
itz
le
eT
at
Ek
an
ra
Ca
ve
u
el
ee
ha
W
w
Ko
D
St
M
(a
Br
Jo
ee
er
n
Th
so
at
el
w
N
w
Ra
Tariff step 1 Tariff step 2 Tariff step 3 Tariff step 4 Tariff step 5 Tariff step 6 Tariff step 7
Figure 13. The business case for smart metering and organic effluent reuse in an agri-processor generating 1 000 cubic m/day
wastewater for City of Cape Town’s Level 1 and Level 6 restriction water and sanitation tariffs (FY 2018/19).24
Savings: 70 kl/day Savings: 700 kl/day
10.00 ZAR70 000 000
9.00
ZAR60 000 000
8.00
Project payback period (years)
7.00 ZAR50 000 000
6.00
ZAR40 000 000
5.00
ZAR30 000 000
4.00
3.00 ZAR20 000 000
2.00
ZAR10 000 000
1.00
0.00 ZAR0
Metering Organic effluent reuse
Payback period for level 1 restrictions Payback period for level 6 restrictions Project cost (ZAR)
23
Tariff steps allow for different volumes of water used to be billed at different rates. Where only one step exists (i.e. it is a flat rate), this indicates a fixed volumetric
tariff that is independent of usage.
24
Assuming 70% of wastewater is recovered through reuse and metering reduces the water usage volumes by 7% (however, in practice this has proven to be
much higher).
24You can also read
